The World Council of Credit Unions (Woccu) has helped to set up the first credit union service organisation (CUSO) in Guatemala.
The CUSO, Inversión y Desarrollo Crediticio Comunitario, S.A., is owned by a group of more than 20 credit unions affiliated with Federación Nacional de Cooperativas de Ahorro y Crédito de Guatemala (FENACOAC), which contributed US$5.1m towards its creation.
The CUSO was developed through the WOCCU Technology and Innovation for Financial Inclusion (TIFI) Project with funding from the USAID Cooperative Development Program (CDP).
Woccu says the new body will help credit unions in FENACOAC grow their lending portfolios. Guatemala’s general law of cooperatives currently prohibits credit unions from providing finance to registered corporations, forcing registered small-to-medium enterprise (SME) to turn to banks for financial support, rather than their local financial co-operative.
“For more than 50 years, FENACOAC has partnered with credit unions that have supported entrepreneurial members since the beginning of their commercial activities,” said FENACOAC business coordinator Luis Perez.
“The CUSO makes it legally possible to continue working with those same members once their businesses become legal enterprises, by helping them meet working capital needs, pay for operating expenses, and purchase assets and raw materials. The business owners also have the comfort of knowing credit union professionals working in the co-operative spirit will continue paying attention to and safeguarding their financial needs.”
Megan O’Donnell, senior vice president of international projects at Woccu, said: “The entire goal of the TIFI Project is to help credit unions increase lending to small-and-medium enterprises and deploy available capital effectively. The fact that our team was able to work in unison with Woccu’s member credit unions to develop a legal solution to the lending limitations they faced is a win for cooperative development and a model that can be replicated elsewhere, if necessary.”
Surpluses from the CUSO will be distributed among its member credit unions.
Woccu is leading similar TIFI Project initiatives in Kenya, Burkina Faso and Senegal.